Worksheet preparation of income statement and balance sheet. Refer to the information for Regaldo Department Stores as of January 31, Year 8 in problem 25 of Chapter 2. Regaldo Department Stores opened for business during February, Year 8. It uses the accrual basis of accounting. Transactions and events during February were as follows.

(1) February 1: Purchased display counters and computer equipment for Ps 90,000 . The firm borrowed Ps 90,000 from a local bank to finance the purchases. The bank loan bears interest at a rate of 12 percent each year and is repayable with interest on February 1, Year 9.

(2) During February: Purchased merchandise on account totaling Ps217,900.

(3) During February: Sold merchandise costing Ps162,400 to various customers for Ps62,900 cash and Ps194,600 on account.

(4) During February: Paid to employees compensation totaling Ps32,400 for services rendered during the month.

(5) During February: Paid utility (electric, water, gas) bills totaling Ps2,700 for services received during February.

(6) During February: Collected Ps84,600 from customers from sales on account (see transaction (3) above).

(7) During February: Paid invoices from suppliers of merchandise (see transaction (2) above) with an original purchase price of Ps210,000 in time to receive a 2percent discount for prompt payment and Ps29,000 to other suppliers after the discount period had elapsed. The firm treats discounts taken as a reduction in the acquisition cost of merchandise.

(8) February 28: Compensation that employees earned during the last several days in February and that the firm will pay early in March totaled Ps6,700.

(9) February 28: Utility services that the firm used during February and that the firm will not pay until March totaled Ps800.

(10) February 28: The display counters and computer equipment purchased in transaction (1) have an expected useful life of five years and zero salvage value at the end of the five years. The firm depreciates such equipment on a straight-line basis over the expected life.

(11) February 28: The firm recognizes an appropriate portion of the prepaid rent as of January 31 (see problem 25 in Chapter 2).

(12) February 28: The firm recognizes an appropriate portion of the prepaid insurance as of January 31 (see problem 25 in Chapter 2).
(13) February 28: The firm amortizes (that is, recognizes as an expense) the patent over 60 months (see problem 25 in Chapter 2).
(14) February 28: The firm recognizes an appropriate amount of interest expense on the loan in transaction (1) above.
(15) February 28: The firm is subject to an income tax rate of 30 percent of net income before income taxes. The income tax law requires firms to pay income taxes on the fifteenth day of the month after the end of each quarter (that is, April 15, July 15, October 15, and January 15).

a. Create a worksheet with a column for each of the balance sheet accounts on January 31, Year 8 (see problem \(\mathbf{2 5}\) in Chapter 2). Leave space to add asset, liability, and shareholders' equity accounts as needed. Enter the amounts from the balance sheet on January 31, Year 8.

b. Enter each of the 15 transactions or events listed above in the various accounts, creating additional accounts as needed. Use a single revenue account and a single expense account, but label each entry affecting a revenue account (for example, sales revenue) and an expense account (for example, salary expense). Be sure to indicate whether the transaction (1) increases or (2) decreases each account. Use the numbers of the 15 transactions to cross-reference your entries on the worksheet. Be sure that you enter the dual effects of each transaction so that you maintain the balance sheet equality of assets with liabilities and shareholders' equity.

c. Prepare an income statement for the month of February, Year 8.

d. Prepare a balance sheet as of February 28, Year 8.